Shifting the Transportation Paradigm

The Evolution and Impact of Ridesharing on Cultures and Economies

The concept of ridesharing is not new. It’s been part of North America’s transportation landscape for decades. Early carpooling clubs date back to the era of the Second World War, and they surged in popularity during the energy crises of the 1970s. By the time energy prices and supplies stabilized, it was the 1980s and consumer culture had once again become a dominant social force. Cars doubled as status symbols. Traffic congestion was viewed as a necessary evil. Global warming was a distant murmur, not yet widely accepted as an inevitable reality. Ridesharing was relegated to the sidelines.

Yes, cars became smaller and more fuel-efficient as the 1990s wore on. Eventually, environmental consequences of the entrenched way of doing things became undeniable. But carpooling largely remained an overlooked concept until the peer economy emerged in the 21st century.

Smartphones have proven to be game-changers in the recent rise of urban transportation alternatives. Connecting with local rideshares is as easy as downloading an app or visiting a website. Maps and route-planning tools have gone digital. Communication is instant. With ecological awareness at an all-time high, these factors have combined to make ridesharing an increasingly prominent part of the contemporary transportation conversation.

Today, ridesharing is being embraced by a wider group of people than ever before. Municipal and regional governments, struggling with problems like crumbling highway infrastructure, record levels of air pollution and low rates of transit ridership, finally appear ready to look beyond the era of catering to solo drivers. A growing number of corporations have begun offering carpool-based commuting programs as part of their employee transport management policies. Nonprofit groups and public agencies have turned to vanpools as an effective alternative for people facing accessibility issues. Companies like Uber are redefining the on-demand urban transportation landscape.

This landscape, no doubt, is changing. It’s affecting cultural and economic realities around the world. Looking at the changes it’s inspired yields important clues about the future — one that’s being reshaped by mobile technology.

The Rise of the Modern Rideshare

Traditional notions of the service-sector economy revolved around buyers and sellers connecting with one another through intermediary businesses. First, Person A needed a service, like a ride to the airport. Then, Person B provided that service, through a taxi company. The taxi company connected Person A with Person B. Person A got to the airport. Person B got paid. The taxi company took a cut. And so it went, until instant and ubiquitous Internet connectivity changed everything.

Technology suddenly made a decentralized, peer-to-peer (P2P) economy a viable force. Mobile platforms, in particular, made it possible for Person A, who needs a ride, to connect with Person B, who has a car. The taxi company no longer serves an irreplaceable purpose in the equation. Suddenly Person A can just message Person B directly. This set the stage for Uber to come in and challenge the long-standing monopoly over on-demand urban transportation held by the taxi industry. With Uber posting a $62.5 billion valuation in late 2015, it’s safe to say that this new service model has proven wildly successful.

One of the hallmarks of today’s technology-driven age is the speed at which it changes and evolves. This rapidly shifting landscape holds great potential. Finally, we can achieve the reduction in single-passenger vehicles and car trips that have long been seen as a major impediment to alleviating urban traffic congestion and the pollution that comes with it. Now, it’s not only possible for Person A, who needs a ride, to connect with Person B, who has a car. Person A can also share the ride with Person C, who is going the same way. A growing number of smartphone apps are making it easier than ever to create, manage and operate carpools for commuters, and to make the most of the growing number of alternatives to solo driving.

It’s now possible for smartphone users to make immediate connections with other people in the area. This can help them find others looking to join a carpool group, add them to an existing rideshare program, or create a new one. Driving, pickup and drop-off schedules can be made or edited within minutes. Notifications and messages can be instantly sent to members. These powerful applications are revolutionizing everything from daily commuting to organizing rideshares for kids who attend the same school or play on the same sports team. For businesses, they also offer access to federal commuter benefits: carpools, vanpools, and other forms of shared mobility can all qualify for payroll tax breaks when they are supported through benefits programs.

The growing popularity and increasing use of such transportation management apps reflects a larger cultural trend that’s having a major impact on societal values, and the way people work and think about their lives. These changes are guiding the P2P economy into something new and even bigger — something called the “sharing economy.”

Ridesharing and the Sharing Economy: Reflecting a Changing Culture

The emerging plethora of transportation management options, as well as major industry players like Uber, Via, Sidecar and Lyft, reflect a cultural trend that’s defining contemporary times: the desire for choice. People today are far less willing than previous generations to just defer to the status quo. They want options. They want personalized alternatives. They don’t just accept things “the way they are.” They don’t want to be told how to do things. They want to find their own way of doing things, and they want it to be a better way than existed before.

Rides aren’t the only thing being bartered in the sharing economy. Airbnb was one of the first major success stories of the P2P revolution. Airbnb lets people rent out their homes or spare rooms to travelers who want an alternative to staying in hotels. With an app called Splinster, users can rent bicycles directly from owners. Need to borrow some tools? Try NeighborGoods. Want to find a safe place to leave a pet during a vacation without paying kennel rates? Check DogVacay. There are even apps like TaskRabbit that allow connected users to share their time and offer up their expertise.

Mobile connectivity has made the world a more collaborative place. Much has been said about the depersonalizing and alienating effects of modern technology. However, it is actually helping bring people together in exciting, never-before-seen ways. With the growing momentum behind the sharing economy movement, traditional and centralized cultural and economic models are giving way to a renewed focus on the local. That, in turn, is invigorating and reawakening communities and the sense of interconnectedness that is so vital to life satisfaction.

Driving Change through the Sharing Economy

The initial rise of the P2P economy came with flaws and challenges. Uber, for example, doesn’t get a car off the road when it picks up a single passenger who would otherwise have driven or taken a taxi. It’s the sharing economy, and the way it empowers people to unite on behalf of a common purpose, that is driving a higher degree of innovation and fostering the community spirit.

Consumer research offers some interesting insights into the many ways the sharing economy is continuing to drive change. Studies have shown that the concept of possession is falling out of favor with the millennial generation, at least when it comes to big-ticket items like houses and cars. Some would argue that these attitudes are byproducts of having come of age in the era of the 2008-2009 global economic crisis. Meanwhile, others believe it’s a direct result of growing up in a hyper-connected world. Life flexibility is one of the generation’s most cherished values. Geo-independence is more important than owning big, expensive, shiny toys. Owning things doesn’t matter; life does.

Leading economists and forward-thinking entrepreneurs predict that a collaborative approach to ownership will be a definitive feature of the economic landscape of the near future. What’s emerging is a never-before-seen way of thinking about consumption, one that’s based on trust, courtesy and a belief that, to most people, it matters that everyone is in this together. Advertising agencies are even getting into the mix by promoting matchmaking services and sell/exchange campaigns alongside traditional “buy this, go here, see that” approaches. Collaboration is becoming a core concept in changing notions of consumption, and people themselves are key players in the transaction equation.

This, of course, has a direct relationship with current ridesharing trends. As people continue to come together in new ways, transportation itself will keep changing and innovating. While the current generation of ridesharing and carpooling apps have had a transformational effect, the sky is the limit when it comes to the future. More cultural and economic changes are certainly in store, especially considering that the advent of the driverless car may be only a few years away.

Looking back over the last 40 years of carpooling, it’s possible to draw direct parallels between ridesharing and societal attitudes in general. During the 1970s, before smartphones existed, carpools were feasible because the vast majority of people worked regular 9 to 5 jobs. It was a predictable world built around unchallenged standards. As working hours grew longer during the 1980s and the early 1990s, ridesharing declined. It took the technological revolution, and the brand-new ways of thinking about the work-life balance it inspired, to bring it back in a big way. But it’s back, and it’s here to stay. As traffic congestion, urban pollution and social disconnectedness continue to pose major challenges, that’s definitely a good thing.

The Future of Ridesharing and Its Impacts

Ridesharing’s current golden age points to a bright future. Market analysts note that services like Uber and Lyft have enormous valuations, but not because they are profitable. In fact, financial reports indicate that Uber posted an operating loss of about $3 billion in 2018 after suffering a $4 billion operating loss the previous year. The reason these companies have attracted so much attention is because investors believe ridesharing will evolve into an enormously profitable enterprise in the future.

So, what does that future look like and how will it impact urban mobility? Here are a few interesting opinions gathered from noted TDM thought leadership experts:

Ridesharing will force cities to embrace multimodal approaches to transportation: Carpooling systems have effectively bridged gaps in public transportation services, bringing multimodality to cities around the globe. This trend will only accelerate as time goes on, forcing public transit systems to optimize their efficiency in order to remain relevant to create a classic win-win scenario.

Disruptive innovations will continue to make shared rides cheaper: A growing number of carshare companies and rideshare providers are moving toward fleet electrification, favoring the use of EVs over traditional gas-powered vehicles. This benefits the environment as well as the end user, since fuel expenses account for a great deal of current ridesharing costs. Going electric will bring consumer prices down, which will likely drive adoption rates up.

Ridesharing will expand to nontraditional markets: Right now, ridesharing is prevalent in major cities and areas with dense population profiles. In the future, as technologies continue to improve, look for on-demand carpooling systems to come to smaller cities and even rural areas. Data aggregators will effectively and efficiently be able to group together people who are all headed in the same general direction, providing them with cost-effective microtransit services that will reduce their reliance on cars.

No matter what the future of ridesharing may hold, one thing appears certain: connectivity technologies will continue to drive increasing innovation, making owning a car less and less necessary. When automated vehicles are finally ready to be rolled out on a large-scale basis, look for vehicle ownership rates to start plummeting. Some optimistic industry analysts believe that privately owned vehicles will one day seem as obsolete as floppy disks and cassette tapes.

RideAmigos is a leading innovator in enterprise, education, and public sector transportation demand management. We provide organizations with cutting-edge tools to help people make smarter transportation choices and skip the solo drive. Contact us today, and join the movement to transform transportation through technology.